Low interest rates, tons of listings on the market, motivated sellers, reduced prices...what a great time to buy! Still on the fence? Need yet another reason to buy? The government just provided one. It's called the Housing and Economic Recovery Act of 2008, and it was enacted just over a month ago.
What is it?
Well, the bill includes a number of provisions, including property tax deduction for those who don't itemize their income taxes, a low-income housing credit and other reforms. But the item of most interest to many is the tax credit for home buyers.
Who is eligible?
The tax credit is available to first time home buyers who purchase a primary residence before July 1, 2009.
How much?
The tax credit is 10% of the purchase price, with the maximum credit being $7,500.
Tax credit...is that like a tax deduction?
No, it's better than that. A tax credit is a dollar-for-dollar reduction in your tax bill, which makes it more valuable than a tax deduction. Also, this tax credit is refundable. In other words, if you're eligible for the tax credit and you paid less than $7,500 in federal income taxes, you'll still get the rest back in a tax refund.
Any catches?
Of course...this is the government we're talking about here! The first catch is that you have to pay back the credit over 15 years. Still, that's a pretty good deal. You get up to $7,500 now, and you just have to pay an additional $500 a year in taxes for 15 years, starting in 2010. Basically, it's an interest-free loan.
Any restrictions?
You betcha. The tax credit phases out for single taxpayers with adjusted gross income of $75,000 to $95,000. For married couples who file jointly, the phaseout is $150,000 to $170,000.
There are more details, but that's it in a nutshell. If you'd like more information, feel free to contact us and we'll send you a 6-page PDF document with the whole scoop. There may be other programs available as well, so we recommend you contact a mortgage professional to discuss your specific situation.
Mike McGee
Broker / Owner
real estate services
404.478.7800
